Airline Biz Blog

Judge: I’ll rule as quickly as I can in American Airlines-US Airways case, maybe today

As he concluded a morning hearing Monday, U.S. Bankruptcy Judge Sean Lane promised a quick decision on American Airlines’ request to exit bankruptcy and merge with US Airways.

“Here’s what I’m going to do. I’m going to take everything under advisement and issue a decision very quickly. We may be able to do that as soon as this afternoon, but it may take another 24 to 36 hours. In any event, it will be done by Wednesday,” Judge Lane said.

“It could take several forms. It could take the form of a short explanation from the bench and something written. It could take the form of a bench decision,” he said.

He told attorneys and others that if he issues a ruling from the bench, he won’t require participants to return to his courtroom. He noted that it’s hard to make travel arrangements this week with the Thanksgiving holiday filling up airplanes.

“I don’t plan on thinking about this over Thanksgiving,” he said as he wrapped up a two-hour-plus hearing.

American and parent AMR are seeking Lane’s approval so that they can emerge from bankruptcy with a plan of reorganization that Lane previously approved this fall, pending resolution of an antitrust lawsuit filed Aug. 13 by the U.S. Department of Justice. The DOJ, American and US Airways settled that lawsuit Nov. 12.

A key part of American’s Chapter 11 reorganization is that American and AMR would merge with US Airways Group to create American Airlines Group Inc.

Lane heard from attorneys for American, US Airways and the unsecured creditors committee in American’s bankruptcy case. All urged the judge to rule in American’s favor.

In specific, Lane was asked to find that a settlement with the U.S. Department of Justice did not damage the plan and did not require American to ask creditors and stockholders to vote again to confirm the plan.

But much of the hearing was devoted to a request for a temporary restraining order to stop the merger.

A private antitrust lawsuit filed by San Francisco attorneys Joseph Alioto and David Cook seeks to block the merger on grounds that it violated the Clayton Act, a federal antitrust statute.

“There are serious questions being raised. There are tens of millions of American being affected on a daily basis. These are two strong, powerful companies, both of whom can operate separately without any help whatsoever,” Alioto said.

“It is a non-trivial transaction. They are significant rivals. The welfare of the United States is supported by the enforcement of this law and following the Supreme Court decision,” he said.

Attorneys for American, its creditors committee and US Airways criticized the Alioto lawsuit, filed on behalf of 40 plaintiffs, for lacking evidence of irreparable harm done to the plaintiffs. However, further delays would cause irreparable harm to the airlines by delaying the benefits of the merger and delaying the payoff to creditors and stockholders.

Alioto told the judge that the plaintiffs would have liked to have undertaken discovery and interviewed witnesses. However, the case was put on hold while the DOJ action was ongoing, he said. The plaintiffs wanted to go to trial Nov. 12, Alioto said.

Alioto said the merger would reduce capacity and competition in the industry, allowing the new American and other players to raise prices. He cited a wide variety of sources, including testimony by US Airways chairman and CEO Doug Parker, a Government Accountability Office study and newspaper articles.

Judge Lane repeatedly stopped Alioto as the lawyer talked, pointing out that Alioto was referring to things that had not been submitted in Lane’s court. He also asked Alioto to quit citing things at length that had been filed in the case.

As Alioto was talking about the GAO’s conclusions on Southwest Airlines, the judge interrupted: ““I don’t need you to read the GAO report to me. I’ve read the GAO report.”

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Terry Maxon writes about items of interest to travelers and the aviation community.